sugar_surplus

sugar_surplus - F Excess Cost of HFCS production, above...

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15.010/011: Consumer Surplus and the Sweetener Quota Analysis P cents/lb Supply D A2 A1 B1 F E A3 B2 C Demand 21.8 11.3 11.0 Where: 4.6 8.1 44.3 8.6 24.3 38.6 Q bil/lbs A1 – Domestic Producer Surplus ( above 11 ) for producers who would produce at prices of 11.0 or below. A2 – Domestic Producer Surplus for producers who only would produce between 11.0 and 11.3. A3 – Domestic Producer Surplus for producers who only would produce at prices of 11.3 and above. B1 – Excess Cost (above 11) for Domestic Producers who would produce at prices between 11 and 11.3. B2 – Excess Cost (above 11) for Domestic Producers who would produce at prices of 11.3 and above. C – Consumer surplus (loss) for demand with marginal valuations between 11 and 21.8, at world price of 11. D – Profits to Foreign Producers from selling at US price of 21.8 instead of world price of 11. E – Profits on HFCS

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Unformatted text preview: F Excess Cost of HFCS production, above world sugar price of 11. Calculations B1 = 0.5*(0.3*0.5) = .075 billion cents = \$ 0.75 million = \$ 750 thousand A1 = 10.8*4.6 = 49.7 billion cents = \$ 497 million A2 = 10.8*0.5 - B1 = 5.33 billion cents = \$ 53.3 million E = 15.7*10.5 = 164.9 billion cents = \$ 1,649 million F = 15.7*0.3 = 4.7 billion cents = \$ 47 million A3 = 0.5*(14.3*10.5) = 75.1 billion cents = \$ 751 million B2 = 14.3*10.8 - A2 = 79.3 billion cents = \$ 793 million D = 10.8*3.5 = 37.8 billion cents = \$ 378 million C = 0.5*(5.7*10.8) = 30.8 billion cents = \$ 308 million A = A1+A2 = \$ 1,300 million B = B1+B2 = \$ 794 million change in CS = (A+B+E+F+D+C) = 10.8*38.6 +C = 334+23 = \$ 4.475 billion. change in PS = A+E = \$ 2.949 billion Revenue to importers = D = \$ 378 million Deadweight loss = B+F+C = \$ 1,149 million...
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This note was uploaded on 10/20/2011 for the course SLOAN 15.010 taught by Professor Berndt during the Fall '04 term at MIT.

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sugar_surplus - F Excess Cost of HFCS production, above...

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